We get a lot of calls from people complaining about Guardian disability insurance. People are aggrieved by a variety of Guardian’s insurance practices. They decry Guardian’s frequent requests for progress reports, requests for updated medical records, paystubs, work production codes, requests for the names and contact information of their colleagues, doctors, therapists and more. The most common question seems to be, “Is this really necessary?”
As with many questions in insurance law, the answer is not very straightforward. The truth is, it depends on a number of factors. When it comes to the client’s duties, our analysis is guided by two main components. First, the insurance policy, which constitutes a binding contract between an insurance company (insurer) and a policyholder (insured). The policy sets forth the duties of each party. And second, what does the law say? It is important to recognize that insurance companies use policy terms to justify seemingly endless document requests, and rarely, if ever, acknowledge the fact that the law might say otherwise.
Almost every disability insurance policy requires the insured to submit “satisfactory proof of loss.” What does that mean? You may be surprised to learn that your disability policy does not actually define the term “proof of loss.” Even if it appears in a glossary, the definition is probably so vague that it provides no help. “Proof of loss means proof that is satisfactory to us that you have experienced a covered cause of loss.” Moreover, the policy does not really explain what would be deemed satisfactory. Are medical records alone satisfactory? Is it solely up to the discretion of the insurer? Insurance companies certainly would have you believe so. After all, these are large corporations. They are informed and authoritative – they know better than you what is required of your claim, right?
The old saying “knowledge is power” is so true in the context of disability insurance. If you do not know what you need to prove and how to prove it, you will be at a major disadvantage and your claim will almost certainly be denied or underpaid. When you first file a claim, two things tend to be obvious – one you have been injured or you are sick, two it is affecting your work. This is the basic framework of disability insurance. Beyond that, the issue is how to prove it to your insurer.
Once your claim is filed, you typically receive correspondence from your insurer stating that to receive benefits, you are required to submit “satisfactory proof of loss.” Guardian tends to list specific documents it needs to approve your claim, such as questionnaires, attending physician statements, medical records, tax returns (usually three to five years of prior tax returns, in addition to your current return), pay stubs and earning statements.
Without a doubt, proof of loss serves an important function. Insurers need to verify that the insured is actually disabled. They need to calculate loss of earnings for insureds who are residually disabled. They need credible evidence before they pay out claims. They are not obligated to simply take your word for it. However, insurers frequently exceed the bounds of reason when it comes to proof of loss.
Many insureds become frustrated after they provide what seems like more than enough documentation and their claim remains mired in delay. “They have all of my medical records, tax returns, paystubs, and questionnaires, but they keep coming up with more requirements. Now they need an independent medical examination. Now they need an in-person interview. Now they need to speak with my doctor. Now they need an earnings report. Why is this necessary? I am clearly disabled.”
During the later stages of this back-and-forth (usually a couple of months after filing a claim), insureds express their frustration to their claim representative. The response is predictable. “We understand, we do apologize, but your policy requires that you submit satisfactory proof of loss. Unfortunately, we cannot approve your claim without these documents.” They throw policy language in your face, as if to accuse you of attempting to circumvent policy requirements, or do an end-run on your contractual obligations. Many insureds tell me the implication is clear – that their insurer thinks they are gaming the system. They act like you are hiding something. This gives people an uncomfortable sense that they are doing something wrong. And it compels insureds to either give up, or comply with unnecessary requests for proof of loss, even when the evidence clearly shows the insured is disabled and entitled to benefits. Why would an insurance company do this?
Insurers use the proof of loss requirement as a delay tactic. Eventually, insureds just give up and the insurer does not pay a dime on a legitimate disability claim. When forcing insureds to throw in the towel does not work, insurers use proof of loss as a basis to deny claims. When an insurer bombards you with extensive document requests, naturally some documents fall through the cracks.
Gathering documents is tedious, time-consuming, and expensive. Insureds find themselves on the telephone for hours trying to retrieve their medical records from a hospital or asking their doctor to fill out a questionnaire. Treating doctors take time to return these questionnaires. And they experience frustration with this process, as well.
Doctors frequently complain about insurance company representatives calling them for an interview. I have received several complaints from doctors about Guardian asking them for information that they do not have, such as, “What are the work duties your patient can and cannot perform?” Doctors often say the insurance company was putting words in their mouth and twisting their opinions. This puts doctors in an infuriating position where they have to spend valuable time chasing down insurance company representatives to set the record straight. Given the large, bureaucratic nature of insurance companies, it can take hours to reach someone by telephone, and you usually have to leave a message – all of which causes further delay.
Hospitals are another problem when it comes to proof of loss. They refuse to release medical records without several levels of review and authorization forms. Documents get lost on someone’s desk or in the mail. All the while, your insurer is dialing up the pressure and imposing deadlines for document production. For example, “You need to provide hospital records by September 27, 2020 in order for us to continue to evaluate your claim for disability.” Two weeks go by, you do not have the documents, the deadline is rapidly approaching and there is nothing you can do to get these records from the hospital in time.
Your insurance company will not hesitate to close your claim, on the basis that it has not received certain documents by the deadline. “We have not received satisfactory proof of loss. Therefore, your claim has been closed.” This happens frequently. Shockingly, it happens even after you have sent your insurer an overwhelming majority of the documents it requested. It happens even on the basis of failure to submit irrelevant documents by a certain date. Yet the policy language would have you believe that the insurer is within its right to deny a claim when it has not received satisfactory proof of loss – whether it was unsatisfactory because it was not provided by the deadline, or you forgot to submit certain documents. The law, however, says otherwise.